Dell sucks another $7m out of North Carolina

Free land

Common Topics

After pumping North Carolina for more than $270m, Dell decided it wasn't done yet. Actually pay for the land its new factory will sit on? Hell, no!

In a confusing exchange deal, Dell will "pay" the city of Winston-Salem $7m for land in return for $7m worth of roads and grants from the city to Dell, so it gains the 200-acre factory site for free. Dell currently faces a massive lawsuit over other parts of the North Carolina package.

Originally, Forsyth County and Winston-Salem officials had agreed to front the cost of the 200-acre site housing Dell's new plant. But lawyers negotiating the deal grew concerned that, among other things, the arrangement made it possible for Dell to sell and profit from land the city bought. Hence the new deal in which Dell kind of, sort of pays for the land but doesn't really. The Winston-Salem City Council approved the change this week and is in the process of signing new contracts, The Register has learned.

"Now, Dell pays us directly for the land," said Derwick Paige, assistant city manager of Winston-Salem confirmed in an interview with us. "However, of the $7m that they pay us, we will put all the money in a general fund and take $1.5m to put toward infrastructure improvements and the other $5.5m we'll give to them over a two year period in the form of grants."

With the extra $7m, Dell's total North Carolina incentives package now comes to $284m. That's $244m more than Virginia, the second leading bidder for Dell's factory, was reportedly willing to offer.

Dell's package includes the land money, tax breaks, police protection, special Dell training classes at local colleges, new roads and a host of other fixes. In return, Dell could deliver as many as 1,600 jobs to the city, although it can fire close to half that amount and maintain the package perks. Locals have complained that the company has received unfair advantages that will harm smaller businesses. The net benefit for employment in the city is far from clear.

Thanks to our local reporters, you can see the $7m worth of land here.

Paige said the new land contract has nothing to do with the lawsuit. Dell and local officials have been renegotiating terms for the past six months, and the city council's vote on Monday was the final sign-off needed to close the deal.

"Attorneys from all sides thought these changes would make the deal stronger in case there was a challenge," Paige said. "Now, there is a challenge (with the lawsuit)."

The North Carolina Senate recently approved a measure that will allow the state to continue offering such incentive packages to companies for the next two years. The state has suffered from job losses in key tobacco farming and textile industries and is trying to build out an already sturdy technology sector. One of Dell's closest allies - Red Hat - calls North Carolina home.

It's good to see such staunch Republicans as Chairman Michael Dell and CEO Kevin Rollins, who donated in 2004 to the Every Republican is Crucial PAC, the Longhorn PAC, Tom DeLay, the Republican National Committee and George W. Bush, so happily take enormous government handouts. Dell is one of the most profitable computer makers on the planet, making $3.3bn net income last year. ®